Donald K. Ngwe

Assistant Professor of Business Administration

Donald Ngwe is an assistant professor in the Marketing Unit. He teaches the Marketing course in the MBA required curriculum.

Professor Ngwe directs his research at measuring consumer responses to online and offline retailing strategies and predicting the performance of pricing schemes and product assortment decisions, particularly in the fashion and apparel industries. His current work concerns market segmentation through outlet stores, the effectiveness of discount price labeling, and online price discrimination.

Professor Ngwe earned his PhD in economics at Columbia University, together with an MPhil and MA, also in economics. He holds a bachelor’s degree in economics from the University of the Philippines.

Donald Ngwe is an assistant professor in the Marketing Unit. He teaches the Marketing course in the MBA required curriculum.

Professor Ngwe directs his research at measuring consumer responses to online and offline retailing strategies and predicting the performance of pricing schemes and product assortment decisions, particularly in the fashion and apparel industries. His current work concerns market segmentation through outlet stores, the effectiveness of discount price labeling, and online price discrimination.

Professor Ngwe earned his PhD in economics at Columbia University, together with an MPhil and MA, also in economics. He holds a bachelor’s degree in economics from the University of the Philippines.

Working Papers

  1. Fictitious Pricing in Retail

    Donald Ngwe

    Prices in a wide variety of contexts come in three parts: an "original" or "suggested" price, a discount off that price, and the final price. Little empirical evidence is available that speaks to how each pricing component affects purchase behavior, even as theories abound. This paper outlines the main theories of fictitious pricing with their corresponding predictions and examines their relevance empirically. It exploits retail transactions data that features large variations in these pricing components together with a relatively homogeneous product space. The results have important implications for how managers should set each pricing component to maximize profits.

    Keywords: pricing; discounts; Sales; retail; Marketing; Retail Industry;

    Citation:

    Ngwe, Donald. "Fictitious Pricing in Retail." Working Paper, March 2016. View Details
  2. Why Outlet Stores Exist: Averting Cannibalization in Product Line Extensions

    Donald Ngwe

    Outlet stores are a large and growing component of many firms' retailing strategies, particularly in the fashion industry. Outlet stores offer attractive prices in locations far from central shopping districts. The main perspectives on why outlet stores exist can be broadly classified into inventory management, geographic segmentation, and price discrimination through consumer self-selection. I evaluate these perspectives in the context of a major fashion goods firm using newly available and highly granular data. Model-free evidence suggests that inventory management and geographic segmentation are not the main drivers for outlet store use. Consumers who shop at outlet stores also do not differ significantly from those who shop at regular stores in terms of income. I use a structural demand model to show that consumers are segmented according to their sensitivity to travel distance and taste for product newness. I then develop a supply model to predict product development responses to changes in store locations. Through policy simulations, I discover that the firm uses outlet stores to serve lower-value consumers who self-select by traveling to outlet stores from central shopping districts. The firm sells older, less desirable merchandise through outlet stores to prevent cannibalization of regular store revenues by means of exploiting the positive correlation between consumers' travel sensitivity and taste for new products. I find that the rate of new product introduction in regular stores would fall by 13% if outlet stores were closed down, while variable profits would decline by 19%. These results imply that the existence of outlet stores may enable firms to improve quality in their regular channels, thus counteracting brand dilution effects.

    Keywords: fashion; industrial organization; outlet stores; price discrimination; retail; Price; Product Marketing; Fashion Industry; Retail Industry;

Cases and Teaching Materials

  1. Zalora Philippines: From Growth to Profitability

    Donald Ngwe and Thales Teixeira

    In May 2015 Paulo Campos, Co-Founder and CEO of Zalora Philippines, found himself at a crucial turning point in his young company’s development. In just three years, Zalora had come from entering the Philippine fashion retail industry as an unknown quantity to becoming a household name across the Southeast Asian archipelago. Campos and his team had achieved much in this time: launching one of the first online retailers in the country, building a logistics network from scratch, acquiring customers at an astonishing pace, and signing up major brands to offer on Zalora.com.ph. But now his investors were ready for him to shift gears and focus on turning a profit within the next two years. Zalora Philippines was part of Zalora Group, a Singapore-headquartered online fashion retailer that operated across Southeast Asia. Zalora Group, in turn, was part of a global entity called Global Fashion Group (GFG), which owned online fashion retailers and brands in emerging markets across the world. In addition to Zalora in Southeast Asia, GFG owned Dafiti in South America, Namshi in the Middle East, Jabong in South Asia, Lamoda in Eastern Europe, and The Iconic in Australia. GFG’s principal investors were Kinnevik, a Swedish investment company, and Rocket Internet.

    Keywords: Online Technology; Business Subsidiaries; Business Growth and Maturation; Fashion Industry; Retail Industry; Sweden; Southeast Asia; Philippines;

    Citation:

    Ngwe, Donald, and Thales Teixeira. "Zalora Philippines: From Growth to Profitability." Harvard Business School Case 517-009, September 2016. View Details
  2. Planters Nuts (B): The Power of the Peanut

    Robert J. Dolan and Donald K. Ngwe

    This case picks up from the events in Planters Nuts and describes how the new management team for Planters turned the brand around in 2013 by implementing a new brand positioning accompanied by a multimillion dollar marketing campaign.

    Citation:

    Dolan, Robert J., and Donald K. Ngwe. "Planters Nuts (B): The Power of the Peanut." Harvard Business School Supplement 516-012, August 2015. View Details
  3. Planters Nuts

    Robert J. Dolan and Donald K. Ngwe

    In 2012 Planters had about $1 billion in U.S. annual revenues, but had experienced declining unit sales and household penetration over the past six years. The snack nuts category was growing overall, but household spending was shifting away from peanuts, cashews, and mixed nuts—Planters’ core business—to almonds and pistachios. A new brand management team for Planters had to develop a plan to reinvigorate the still largest brand in the category, and specifically to decide whether to focus on rebuilding its traditional product categories or on attempting to capitalize on the newer nut categories. Central to this process were questions of segmentation, targeting, and positioning.

    Citation:

    Dolan, Robert J., and Donald K. Ngwe. "Planters Nuts." Harvard Business School Case 516-004, August 2015. (Revised April 2016.) View Details